The Circular Flow of Income Model Shows That,if Households and Firms

question 55

Multiple Choice

The circular flow of income model shows that,if households and firms were the only two sectors in the economy,then:

• A)income received by households is equal to the value of output produced by firms.
• B)households directly lend a part of their savings to firms.
• C)firms own the resources of production and rent it out to households.
• D)resources used in production flow from households to firms.
• E)payments for goods and services flow from firms to households.

---

Definitions:

Validity

Accuracy; the extent to which a test or other measuring instrument measures what it is supposed to measure.

Reliability

The extent to which a test or other measuring instrument yields consistent results.

Self-report

A method of gathering data in which individuals provide information about themselves, often used in surveys and questionnaires.

Selye's Theory

A concept introduced by Hans Selye that defines stress as a nonspecific response of the body to any demand placed upon it, highlighting stages like alarm, resistance, and exhaustion.